Paid time away from work: priceless

Sabbaticals an increasingly popular perk at workplaces

It sounds like the ultimate job perk — a year off with pay.

No wonder the sabbatical has increasingly become a way to lure employees to a company and a surefire way to keep them around, too.

Barbara Pagano, co-founder of Atlanta-based yoursabbatical.com, which started up in 2008, says there are no exact numbers on the percentage of people taking sabbaticals but the importance of them shows up in employee satisfaction research.

“The biggest upswing we are seeing is companies who make the best places to work on the Fortune list and have sabbaticals. Every year the number goes up,” Ms. Pagano says.

She says sabbaticals started taking off in the 1960s with fast food chain McDonald’s Corp., computer chip maker Intel Corp. and U.S. law firms among the trailblazers.

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In a recent paper she wrote with her daughter and cofounder, Elizabeth Pagano, she described “time as the new currency” that employers are using — often that time is used for a career sabbatical when an employee can enhance his or her skill set.

The recession also helped push companies to offer sabbaticals as a way to keep employee costs down because that time was unpaid. Those types of leaves have proven unpopular because employees are too worried they won’t have a job when they get back.

Steve Acken, vice-president of digital services at Environics Communications, was able to take a four-month unpaid sabbatical in 2000 precisely because he was convinced his job would be there when he returned.

“I was four years into [working at] the firm. [The company president’s] decision to support a sabbatical request that came out of left field is why I’ve chosen to stay,” Mr. Acken said.

He had gone straight from school into the workforce and felt like he had missed out on something from his youth, so Mr. Acken took the time to visit 10 countries and take up pleasures like diving in the Philippines and working on a farm in the mountains of Australia.

“They held my job for four months and that was everything,” said Mr. Acken, who also took an extra month off last summer to spend time with his daughter, who was two and a half at the time.

Environics Communications is a strong supporter of employees taking time off and even offers them an extra week of holiday after five years with a bonus of $4,000 to help pay for a trip.

Unfortunately, a sabbatical is probably still something that only happens in a minority of private workplaces, says Adam Reeve, a human resources manager at Ceridian Canada.

“They are still quite rare other than in the public sector,” said Mr. Reeve, adding that when sabbaticals do happen it’s usually a situation where the employee collects 80% of his wage for four years so he can get paid at that same rate in year five.

One problem for employers is the extra benefits — having 20% of your workforce off at any given time doesn’t mean you stop providing health coverage. You also lose some continuity in the workplace, as one worker has to replace another.

“Usually when you do it, you have to have a reason, most companies will do it for a life event or for educational purposes,” Mr. Reeve said. “To be blunt, it’s done if you’re a resource the company cannot do without. It’s very difficult because you are losing an employee for a year and you have to hold that job.”

Adrian Mastracci, president of KCM Wealth Management, who did his own 17-month sabbatical in 1998, said there’s nothing to stop you from asking your employer for the opportunity.

“One way to do this is have the employer put away 20% for four years,” he said, noting you would gain a small tax advantage by getting taxed at a lower marginal rate. “You could also put away 20% of the net [pay] every year, knowing you won’t get money [during the year off].”

“It’s important to make sure you are still getting health benefits but you could probably buy those benefits on your own for one year if you had to,” Mr. Mastracci said. “I recommend it for clients if they can swing it financially. It can be costly.”

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